A Texas Turnaround: The Impact of Lawsuit R

Executive Summary

A recently completed study by The Perryman Group found that the enactment of a series of lawsuit reforms, beginning in 1995, has transformed the state’s civil justice environment from one that previously hindered economic activity and deterred job growth to one that promotes productivity, enhances efficiency, creates jobs and boosts the competitiveness of the state’s businesses and industries in a global economy. The goal of civil justice reform in Texas has been to create an honest and predictable civil justice system that ensures timely compensation for legitimately injured parties and a fair determination of liability for those who are alleged to have caused harm to others.

“Lawsuit reform has led to improvements in the Texas business climate that have generated hundreds of thousands of jobs.”

The Perryman Group’s analysis shows that lawsuit reform has the additional benefit of nurturing the state’s economic growth in a variety of ways, each producing a ripple effect throughout the Texas economy. Business owners and taxpayers save millions of dollars by eliminating non-productive expenditures related to unnecessary litigation, including administrative costs, court costs and the waste of the time of executives and workers. The Perryman Group concludes that approximately 8.5% of Texas’ economic growth since 1995 is the result of lawsuit reforms. The economic gains attributable to these reforms include:

$112.5 billion increase in annual spending

$51.2 billion increase in annual output – goods and services produced in Texas

$2.6 billion increase in annual state tax revenue

$468.9 million in annual benefits from safer products

$15.2 billion in annual net benefits of enhanced innovation

499,000 permanent jobs

430,000 additional Texans have health insurance today as a result of the medical liability reforms

Perhaps the most visible economic impact of lawsuit reforms are the benefits experienced by Texans who have better access to high-quality healthcare. Doctors and hospitals are using their liability insurance savings to expand services and initiate innovative programs; those savings have allowed Texas hospitals to expand charity care by 24%.